We like the U.S. Supreme Court’s opinion in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), because reining in general personal jurisdiction is a sound and welcome development. General jurisdiction means jurisdiction over any and all disputes, and such a broad prerogative should be reserved to states where the defendant is “at home,” which is basically what the Supreme Court held.
Of course, because several generations of lawyers and judges have grown accustomed to very broad concepts of personal jurisdiction when it comes to large corporations, Bauman was bound to generate some pushback, and our home state of California has just fired one of the first salvos. In Bristol-Myers Squibb Co. v. Superior Court, No. A140035, 2014 WL 3747250 (Cal. Ct. App. July 30, 2014), the California Court of Appeal acknowledged Bauman, but held nonetheless that California’s courts have jurisdiction over claims against non-resident defendants brought by non-resident plaintiffs alleging injuries that occurred outside California and involving products designed, manufactured, and sold outside California. In other words, neither the parties nor the particular products consumed by these plaintiffs ever reached the shores of the Golden State, yet the defendant manufacturer will be held to answer.
How can this be? The answer is that BMS v. Superior Court is a symptom of the condition that we call “litigation tourism,” where hundreds or thousands of unrelated plaintiffs group their claims together in one forum without the slightest consideration for whether that forum is appropriate for each one. The product at issue in BMS is Plavix, and of the 659 individual plaintiffs at issue, only 84 reside in California. That means that the other 575 have imported their claims into California for no reason other than the preference of counsel looking for a hospitable place to park their inventories.
So what happened in BMS? The defendant manufacturer moved to quash service of the summons with regard to the non-resident plaintiffs only, urging that the court lacked personal jurisdiction in connection with those claims. Id. at *2. The trial court denied the motion and found that it had general jurisdiction over the defendant because of the defendant’s “wide-ranging, systematic, and continuous contacts” with the forum state. The Court of Appeal rejected the defendant’s petition for interlocutory review, but Bauman came out the same day, so the California Supreme Court ordered the Court of Appeal to reconsider. Id. at *3.
The resulting opinion is reasoned, but could be fairly characterized as an end run. The Court of Appeal followed Bauman and held that California’s court lacked general jurisdiction over the manufacturer, which was neither incorporated in California nor had a principal place of business in California. Id. at **8-9. As an alternative, however, the Court of Appeal reached out, decided an issue that the trial court did not reach, and found specific jurisdiction based on the defendant’s “substantial, continuous economic activity” in the forum state. Id. at *1.
If you ask us, “substantial, continuous economic activity” sounds an awful lot like the “systematic and continuous” forum contacts upon which the trial court found general jurisdiction in the first place. A reader therefore could conclude that this court’s “specific jurisdiction” is nothing more than “general jurisdiction” dressed in sheep’s clothing. That hypothetical reader might be right, but it would be oversimplifying the opinion, which is long and includes diligent discussion of personal jurisdiction. At bottom, the Court of Appeal found specific jurisdiction in California over any claim related to Plavix, no matter who brought it, because the defendant sold a lot of Plavix in California. There were other California contacts—various offices and facilities that the Court did not describe in detail—but the clincher was Plavix sales in California exceeding $1 billion over several years, which the court cited over and over again. Id. at *3.
Because of sales in California, the court concluded (1) that the defendant had sufficient minimum contacts with California and (2) that the defendant’s “substantial, purposeful activities in California” were related to the non-resident plaintiffs’ claims. According to the court, sales of Plavix in California allegedly resulted in injury to at least 84 Californians bearing similar burdens of proof. Moreover, “the interstate character of [the defendant’s] business . . . is also significant,” and the “injuries are alleged to have occurred in the course of a common effort.” Id. at **16-17. Finally, the court reasoned that “a defendant’s contacts with California and their relatedness to the claims at hand are inversely related.” Id. at *17. This is a sort of sliding scale under which the more substantial the contacts are, the less they need to “relate” to the claims to support specific jurisdiction.
We can understand finding that the defendant had “minimum contacts” with California, but the conclusion that the relevant contacts were related to the non-resident plaintiff’s claims seems strained. For one thing, we do not see how the California residents’ claims are relevant to jurisdiction over the non-resident plaintiffs’ claims. The mere procedural event of joinder should not change the underlying substantive law. The Court of Appeal asserted vigorously, even defensively, that the Californians are relevant “actors in this drama,” but justifying jurisdiction over one person’s claims by reference to a defendant’s contacts with another is difficult to reconcile with specific jurisdiction. We suppose that could be called “joinder jurisdiction” or “piggyback jurisdiction,” but we doubt the constitution supports jurisdiction just because you join up with another plaintiff who happens to live where the defendant sold a significant volume of the product at issue. We also doubt the U.S. Supreme Court had that in mind when it decided Bauman.
We also do not appreciate how the “interstate character” of the defendant’s business makes any difference. The relevant facts were undisputed: Plavix was neither designed nor manufactured in California; no parties at issue resided in California; no product was sold to them in California; and none of them sustained injuries in California, let alone as a result of conduct directed at California. On these facts, specific jurisdiction as we understand it bears no bias against companies doing business of an “interstate character.” We also would like to take a harder look at the court’s sliding scale. In applying such a scale, the Court of Appeal relied mainly on a case that neither side cited in its briefs.
Perhaps most telling is the court’s discussion of the “reasonableness” of asserting jurisdiction over the defendant. The defendant evidently did not argue that jurisdiction would be unreasonable, focusing instead on the argument that its forum contacts vis-a-vis the non-resident plaintiffs were insufficient. But the court went ahead and wrote a multi-page explanation of why it is reasonable to keep all the hundreds of claims in California. The court’s discussion is too long to summarize here, but it is fair to say that much of the court’s rationale for the “reasonableness” of jurisdiction appears to endorse the “mass tort” business model and the convenience and expediency it purportedly promises. That’s not a sliding scale, but might relate to economies of scale. We routinely see these kinds of arguments in opposition to motion to sever and transfer and motions to dismiss for forum non conveniens, and we disagree.
With the diminished scope of general jurisdiction after Bauman, plaintiffs will push the limits of specific jurisdiction, and BMS v. Superior Court is not the last word. For our part, we take our last words from the closing stanza of the Eagles’ Hotel California, which seems strangely apropos: “Last thing I remember, I was running for the door. I had to find the passage back to the place I was before. ‘Relax,’ said the night man, ‘We are programmed to receive. You can check out any time you like. But you can never leave.’” Welcome to the Hotel California.